28 May 2026 
Julia Ascott, Employment taxes specialist
Welcome to our pensions newsletter, summarising everything we’ve gleaned from higher education pension scheme, and general pensions updates that are useful to the sector.
Whilst the work on the valuation rumbles on in the background, USS issued three member articles with a focus on retirement flexibility, inflation protection, and scheme security. One explains what happens if you choose to move overseas in retirement and how your USS pension can still be paid, while another sets out how USS protects the value of your pension over time through annual increases and other safeguards. A further article aims to reassure younger members by explaining why their USS pension remains a valuable and protected benefit even in uncertain economic times.
May 2026 brought several significant LGPS developments, including the government’s response to the Fit for the Future technical consultation confirming a major shift in how the LGPS is run, especially around pooling, governance, and how investment decisions are made. It signalled a move toward larger, more centralised investment pools, with the aim of improving value, unlocking more investment in UK growth and infrastructure, and tightening oversight of how LGPS assets are managed.
The SAB also published the 2025 Scheme Annual Report, with the main highlight being the continued growth in both membership and assets, with total assets up 10.1% over the reporting period and active membership still increasing.
Over on PensionsAge, recent updates highlight a more positive short‑term position, particularly within the LGPS. Funding has strengthened significantly, with average levels rising to around 122%, enabling employer contribution rates to fall by roughly 22% since 2022. This is providing welcome cost relief and some immediate budget flexibility, although not for everyone.
Improved funding has not translated into easily accessible surpluses. Expectations around DB surplus extraction are likely to prove optimistic, with constraints such as trustee discretion, scheme rules and buyout targets limiting what can actually be released. Funding is also weaker on a buyout basis (around 95.8%), meaning many schemes remain short of the level needed to access surplus.
Obviously, there was big news affecting TPS contribution calculations, with the government announcing a SCAPE uplift which may (or may not) result in a reduction of employer contributions. Whilst many commentators are predicting an 8% deduction to the employer contribution rate, there are no guarantees as contribution rates are not determined by SCAPE alone (see the cautiously optimistic comments from Isio and Mercers within the link above). Whilst we essentially have a policy change that should reduce TPS employer contributions, it is simultaneously sitting in a box of uncertainty until the government actually resets the rate.
Earlier in the month, Higher Education and Funding: Threat of Insolvency and International Students highlighted the TPS as being one of the causes of financial pressure for a number of UK universities and recommended:
This was accompanied by Committee Chair Helen Hayes MP publicly criticising universities that set up subsidiaries to avoid offering TPS, or where alternative pension offerings were linked with better terms and conditions. This was rebuffed by UCEA’s Chief Executive, Raj Jethwa stating that these recommendations fail to address the fundamental unfairness in TPS, highlighting the financial strain and lack of control faced by HEI’s, warning that further restrictions on autonomy could be damaging and calling for regulatory changes to ensure a fair and sustainable pension framework.
TPS has recently updated members on several important matters, including advice to switch from email-based authentication when accessing My Pension Online, a focus on reflecting the diversity of the teaching profession, guidance on how to make a complaint, and a temporary suspension of calculations for pensions on divorce and non-club transfers while revised factors are introduced.
UCEA confirm that valuations are drawing to a close for the NHS Pension Scheme. The NHS Pension Scheme’s 2026-27 Estimate indicates a lower overall scheme cost, but focus should remain on contribution rates, payroll affordability, and pension governance because higher contribution income and the pending 2024 valuation will influence future employer costs from April 2027.
Another valuation rumbling on in the background with the likelihood of another fund in surplus, with the hope of contribution reductions and/or increased employee benefits.
Meanwhile, SAUL have given their website a refresh and responded to feedback from its annual member survey by strengthening the way it communicates with members and shaping its services around what they said matters most. The update points to clearer communications, more helpful guidance and training, and a balanced programme of online and in-person events designed to better support members.
TPR published the Annual Funding Statement 2026, which applies to all defined benefit trust-based pension schemes, including USS and SAUL and sets out the Regulator’s expectations for funding, covenant assessment, and risk management for the 2026 funding year. The broader message from TPR is that funding improvements should not lead to complacency; instead, they should prompt more proportionate monitoring and a sharper focus on emerging risks.
The Pensions Expert commented on TPR’s Annual Funding Statement, emphasising strong DB funding positions but urging caution over surplus release, endgame planning, and the potential risks of diluting pension schemes’ primary purpose of paying secure benefits. They’ve also highlighted key points from the Pensions Commission’s interim report.
If your university is a UCEA member, you can view their excellent pensions newsletter here, which includes updates on their work in getting the government to recognise TPS financial challenges for post-92 universities plus, details on the SAUL valuation and much, much more.
First Actuarial issued a briefing on the Virgin Media remedy following the implementation of the legislative response, plus their quarterly Risk Transfer Briefing.
